Is there one right way to count the waves? I can say this for sure. Until a move is over, there is certainly more than one way to count. Sometimes, even after a move is over, one has to decide where exactly the move finished. Take the case of India’s Sensex. Many Elliott wave analysts would say that the move finished at 7,697 on 27 Oct. After all, didn’t we get a sharp rally from there to 10,945? But it is perfectly possible to argue that that low was only the end of a huge 3rd wave, and the real end of the move happened on 6th March at 8,047. I am going to take the latter approach, at least for now. I have two main reasons for this, and the first two charts to illustrate why I prefer to call 8,047 as the real low.
Having decided that we should start counting the new waves from 8,047, one should decide how to label the rally that reached 15,600. This is also illustrated in the 3rd chart that you see here. As you can see, I am making a whole bunch of assumptions, and anything can go wrong. However, you get a feel of the challenges that a wave analyst faces when deciding where the market will go next. It is perhaps these arbitrary labelling that causes many traders to dismiss wave analysis as utterly useless. However, my contention is even if we get the labels wrong, we will probably be right in the direction of the next move, and that itself is worth the effort.
Thank you for taking Sensex for the discussion.
Is the wave which started from the significant low can be called as the impulse wave or correction wave.
I am excited about your experience and insight into analysis of stocks around the world. Your hobby is really hair raising. Am keen to know your analysis on future trend of India stock market in July-09. Why did you stop it with 21-06-09 post? Am visiting your site daily and would like to see your post everday on India stock market. Hope your time permits.
Hi Sunder, I will publish a report on India tomorrow.
Looking forward to your report on Indian Stock/Market; Where is it now in Elliot Waves
Ramki– Reviewing your chart on sensex- RIGHT ON! Where do you see wave 5 beginning? By the way- wave 4/c was almost perfect on timing and level… this was a great call
I am new to Technicals.Still I wish to know the 5 waves count targets for the Indian markets as on date 15.12.2009
I think the fall from 21300 to 8000 was in 5 waves motive. The current trend is corrective ABC and next is terrible 5 wave fall agin. Prechter has already put fire alarm on US market